Contra Big Data – When the algorithm knows too much

“If you have nothing to hide, you have nothing to be afraid of”, is a popular argument when it comes to the curtailment of the private sphere, whether by public surveillance, social media, or Big Data. What is at the core of this argument? After all, the user of social media platforms decides which of their private information to relinquish for public consumption. And why should I keep the fact that I like Harley Davidson and the Wu-Tang Clan a secret?

The scientist Michael Kosinski researched this question, i.e. whether the so-called likes on facebook say more about a person than the preferences thus articulated, at the University of Cambridge in 2012.[1] To this end he and his colleagues built a facebook app that would create a personality profile for free if the user agreed to fill in a form and share their facebook profile. Subsequently, Kosinski would look for statistical relationships between likes and the personality structures thus compiled. The results were startling – it was possible to predict on the basis of the likes with an 88% accuracy rate whether a person was homosexual or heterosexual. The political view could be modelled at an 85% accuracy rate. On the basis of the interests mentioned earlier for example, the user could be expected to be heterosexual (listens to Wu-Tang Clan) and of below-par intelligence (likes Harley Davidson).

In his follow-up research project in 2014, Kosinski compared the accuracy of a personality analysis based on facebook likes to an assessment by the immediate environment of the subject.[2] The results were frightening: from 10 likes upwards, the computer can give a better assessment of a person than their work colleagues, from 70 likes upwards better than their friends, from 150 likes upwards better than their family members, and from 300 likes upwards the computer beats the subject’s own spouse when it comes to personality assessment. And that only takes a fraction of the digital footprint into consideration that we leave every day! If the algorithm were to be complemented by search queries, the browser history, and online purchases, even more precise statements could be made.

Knowing that somebody owns a dog and sending that person advertisements for dog food does not seem shady. But knowing that someone is pregnant and sending her advertisement material for baby bottles and maternity clothes might constitute an unwanted breach of privacy with undesirable consequences for the person in question. Maybe the mother-to-be wanted to keep her pregnancy a secret for a little while longer? The manipulation of voting during elections by tapping into fears that thanks to social media can be addressed to the potential voter depending on their personality structure is unacceptable.  It constitutes an attack on the basic fundament of our democracy, when the perfect conveyance of the fitting message trumps facts and political programmes in terms of relevance. In this context it therefore seems almost grotesque when the most important former client of Cambridge Analytica and President of the USA uses the expression “fake news”.

Edward Snowden, who has leaked information on how our digital footprint is analysed by governmental surveillance software, has refuted the aforementioned argument therefore as follows: “Arguing that you don’t care about the right to privacy because you have nothing to hide, is no different than saying you don’t care about free speech because you have nothing to say.”

 

^{[1] Kosinski et al. (2013): “Private traits and attributes are predictable from digital records of human behavior”}

^{[2] Kosinski et al. (2015): “Computer-based personality judgments are more accurate than those made by humans“}

 

Legal note:
Prognoses are no reliable indicator for future performance.

 

This document is an advertisement. Unless indicated otherwise, source: Erste Asset Management GmbH. The language of communication of the sales offices is German and the languages of communication of the Management Company also include English.

The prospectus for UCITS funds (including any amendments) is prepared and published in accordance with the provisions of the InvFG 2011 as amended. Information for Investors pursuant to § 21 AIFMG is prepared for the alternative investment funds (AIF) administered by Erste Asset Management GmbH pursuant to the provisions of the AIFMG in conjunction with the InvFG 2011.

The currently valid versions of the prospectus, the Information for Investors pursuant to § 21 AIFMG, and the key information document can be found on the website www.erste-am.com under “Mandatory publications” and can be obtained free of charge by interested investors at the offices of the Management Company and at the offices of the depositary bank. The exact date of the most recent publication of the prospectus, the languages in which the key information document is available, and any other locations where the documents can be obtained are indicated on the website www.erste-am.com. A summary of the investor rights is available in German and English on the website www.erste-am.com/investor-rights and can also be obtained from the Management Company.

The Management Company can decide to suspend the provisions it has taken for the sale of unit certificates in other countries in accordance with the regulatory requirements.

Note: You are about to purchase a product that may be difficult to understand. We recommend that you read the indicated fund documents before making an investment decision. In addition to the locations listed above, you can obtain these documents free of charge at the offices of the referring Sparkassen bank and the offices of Erste Bank der oesterreichischen Sparkassen AG. You can also access these documents electronically at www.erste-am.com.

N.B.: The performance scenarios listed in the key information document are based on a calculation method that is specified in an EU regulation. The future market development cannot be accurately predicted. The depicted performance scenarios merely present potential earnings, but are based on the earnings in the recent past. The actual earnings may be lower than indicated. Our analyses and conclusions are general in nature and do not take into account the individual characteristics of our investors in terms of earnings, taxation, experience and knowledge, investment objective, financial position, capacity for loss, and risk tolerance.

Please note: Past performance is not a reliable indicator of the future performance of a fund. Investments in securities entail risks in addition to the opportunities presented here. The value of units and their earnings can rise and fall. Changes in exchange rates can also have a positive or negative effect on the value of an investment. For this reason, you may receive less than your originally invested amount when you redeem your units. Persons who are interested in purchasing units in investment funds are advised to read the current fund prospectus(es) and the Information for Investors pursuant to § 21 AIFMG, especially the risk notices they contain, before making an investment decision. If the fund currency is different than the investor’s home currency, changes in the relevant exchange rate can positively or negatively influence the value of the investment and the amount of the costs associated with the fund in the home currency.

We are not permitted to directly or indirectly offer, sell, transfer, or deliver this financial product to natural or legal persons whose place of residence or domicile is located in a country where this is legally prohibited. In this case, we may not provide any product information, either.

Please consult the corresponding information in the fund prospectus and the Information for Investors pursuant to § 21 AIFMG for restrictions on the sale of the fund to American or Russian citizens.

It is expressly noted that this communication does not provide any investment recommendations, but only expresses our current market assessment. Thus, this communication is not a substitute for investment advice, does not take into account the legal regulations aimed at promoting the independence of financial analyses, and is not subject to a prohibition on trading following the distribution of financial analyses.

This document does not represent a sales activity of the Management Company and therefore may not be construed as an offer for the purchase or sale of financial or investment instruments.

Erste Asset Management GmbH is affiliated with the referring Sparkassen banks and Erste Bank.

Please also read the “Information about us and our securities services” published by your bank.

Subject to misprints and errors.